agricultural economics beef, dairy, equine, poultry, hogs, sheep, and goats kenny burdine and lee...
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Agricultural Economics
Beef, Dairy, Equine, Poultry, Hogs, Sheep, and Goats
Kenny Burdine and Lee Meyer
UK Ag Economics
Agricultural Economics
Overview of Equine Industry
Fell behind poultry in 2009 cash receipts Will stay there in 2010
T-bred sales make up nearly ¾ of equine receipts, balance is stud fees
Majority of horses used recreationally, fewer dollars, more producers Still challenges with recreation demand and lack of
slaughter market
Agricultural Economics
Racing: Receipts and Sales
$0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
($1,
000)
KY Cash Receipts Equine Receipts
Agricultural Economics
Poultry
Agricultural Economics
BROILER PRODUCTIONFederally Inspected, Ready-to-Cook Weight, Monthly
2.6
2.7
2.8
2.9
3.0
3.1
3.2
3.3
JAN MAR MAY JUL SEP NOV
Bil. Pounds
Avg.2004-08
2009
2010
P-S-1209/27/10
Livestock Marketing Information Center
Data Source: USDA/NASS
Agricultural Economics
BROILER PRICES12-City Composite, Weekly
68
73
78
83
88
93Cents Per Pound
Avg.2004-08
2009
2010
P-P-0109/20/10Data Source: USDA-AMS, Compiled by LMIC
Agricultural Economics
Broiler Market Summary
Largest gross farm income source in Ky. Ag. Production up 3%, per person consumption
continues to increase Exports are very important (about 20% of
production) Prices are up, and are expected to be higher
again in 2011, averaging in the $.83 - .88 range Profits will be hurt by higher feed costs
Agricultural Economics
Hogs
Agricultural Economics
BARROW AND GILT PRICESIowa - So. Minnesota, Carcass Base Price, Weekly
40
45
50
55
60
65
70
75
80
85
90$ Per Cwt.
Avg.2004-08
2009
2010
H-P-0909/20/10Data Source: USDA-AMS, Compiled & Analysis by LMIC
Agricultural Economics
SEPTEMBER 1 ALL HOGS AND PIGSU.S. Inventory (Prior to 1988 Estimated)
45
48
51
54
57
60
63
66
69
72
1984 1987 1990 1993 1996 1999 2002 2005 2008
Mil. Head
H-N-1406/25/10
Livestock Marketing Information CenterData Source: USDA/NASS
Agricultural Economics
IOWA MARKET HOG PROFIT Farrow/Finish, Monthly
-50
-40
-30
-20
-10
0
10
20
30
40
50
2006 2007 2008 2009 2010
$/Head
09/17/10Livestock Marketing Information CenterData Source: Iowa State University
Latest Data: August 2010
Agricultural Economics
Hog Market Summary
Remarkable recovery in prices – up 60% from year ago (Oct.), and 2010 will average 35% higher than 2009;
Price gains are from lower production, and stronger demand – at home and exports;
Sow numbers down about 2%, but even production for 2011 with better efficiency;
Futures markets for 2011 in the $80 to $85 range, about same as 2010
Profits hurt by increasing feeding costs.
Agricultural Economics
Sheep and Goats
Agricultural Economics
SLAUGHTER LAMB PRICESWooled, 110-130 lbs, Sioux Falls, Weekly
85
95
105
115
125
135
145
JAN APR JUL OCT
$ Per Cwt.
Avg.2004-08
2009
2010
S-P-0509/22/10Data Source: USDA-AMS, Compiled by LMIC
Agricultural Economics
Agricultural Economics
Lamb and Goat Summary
• Ky sheep numbers down 7% to 37,000• Lamb prices up about 20% from last year,
selling for $1.40 – 1.50/lb.
• Ky goat numbers are unchanged at 79,000• Goat prices up 20%, with Selection #2 40-60 lb. kids selling for $1.35/lb.
• Both goat and lamb prices likely to continue at these high levels (stronger economy, weak $ compared to NZ)
Agricultural Economics
Dairy
Agricultural Economics
US Milk Production (billion lbs)
40
42
44
46
48
50
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
200820092010
Agricultural Economics
BUTTER PRICESUS, Weekly
1.00
1.20
1.40
1.60
1.80
2.00
2.20
2.40
JAN
APRJU
LOCT
$ Per Pound
Avg.2004-08
2009
2010
Agricultural Economics
US All Milk Price
$0
$5
$10
$15
$20
$25
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
$ p
er c
wt
2004-2008 2009 2010
Agricultural Economics
2010 Dairy Outlook
Milk production likely to increase again Primarily milk per cow
World production was down in 2009, good chance for increase in 2010
USDA projecting $17-20 I’m seeing $15-18
Agricultural Economics
KY Dairy Cow Inventory
0
50
100
150
200
250
300
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
Agricultural Economics
Beef Cattle
Agricultural Economics
Cattle Market Summary Cattle numbers low, and likely dropping Weather Large corn crop, but a lot of difficulty
getting a feel for size Feedlots saw some black ink this spring
Fed market has improved Questionable wheat grazing conditions
and expensive wheat
Agricultural Economics
Livestock Marketing Information Center
Data Source: USDA/NASS
JANUARY 1 TOTAL CATTLE INVENTORYU.S., Annual
70
80
90
100
110
120
130
140
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
Mil. Head
Agricultural Economics
Agricultural Economics
Livestock Marketing Information Center
Data Source: USDA/NASS
SLAUGHTER STEER PRICES5 Market Weighted Average, Weekly
77
82
87
92
97
102
JAN APR JUL OCT
$ Per Cwt.
Avg.2004-08
2009
2010
Agricultural Economics
December Corn Futures
Agricultural Economics
Market Expectations Calves likely have more downside
I look for 5wt steers in $90’s by November / December
I expect rally into spring, to put calves above $110 again
Heavy feeders Price slides will tighten with higher corn prices Spring futures hovering around $110 5wt steers average $105 in KY
Spring board upper $110’s, calf prices in mid-upper $90’s
Agricultural Economics
Med / Large Frame #1 Steers500 to 600 lbs.
40
60
80
100
120
Jan
Feb
Mar
Apr
May
June
July
Aug
Sep
t
Oct
Nov
Dec
$ /
cwt.
2008 1995-2007 2009
Agricultural Economics
Med / Large Frame #1 Steers700 to 800 lbs.
60
70
80
90
100
110
Jan
Feb
Mar
Apr
May
June
July
Aug
Sep
t
Oct
Nov
Dec
$ /
cwt.
1995-2007 2008 2009
Agricultural Economics
KY Hay Production
0100020003000400050006000
1994
1996
1998
2000
2002
2004
2006
2008
1,00
0 to
ns
Agricultural Economics
Wholesale Commodity Feeds(last 36 months)
0
20
40
60
80
100
120
140
160
180
Jan
Feb Mar Apr
May Ju
n Jul
Aug Sep Oct NovDec
SB Hulls
DDG
Agricultural Economics
KY Cull Cow PricesBoning 80-85%
30
35
40
45
50
55
60
Jan
Feb Mar
AprM
ay
June Ju
lyAug Sep
tO
ctNov Dec
2005-2009 2009 2010
Agricultural Economics
Medium / Large Frame #1 Steers 500 to 600 lbs
70
80
90
100
110
120
Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec
2005-2009 1995-2004
Agricultural Economics
Timing of Post-weaning Sales (2004 to 2009)
Wean 530# in October, sell 650# in Dec $61.72 gross margin to put on 120 lbs must put gain on for $0.51 per lb
From 650# in December to 770# in Feb $87.87 gross margin to put on 120 lbs Must put gain on for $0.73
(NOTE: This assumes no price premium)
Agricultural Economics
October 2005-2009
96.00
98.00100.00
102.00
104.00106.00
108.00
110.00112.00
114.00
12/03
/04
12/31
/04
01/28
/05
02/25
/05
03/25
/05
04/22
/05
05/20
/05
06/17
/05
07/15
/05
08/12
/05
09/09
/05
10/07
/05
Agricultural Economics
November CME Group Futures 2005 - 2009
96.0098.00
100.00102.00104.00106.00108.00110.00112.00114.00
12/3
/200
4
1/3/
2005
2/3/
2005
3/3/
2005
4/3/
2005
5/3/
2005
6/3/
2005
7/3/
2005
8/3/
2005
9/3/
2005
10/3
/200
5
11/3
/200
5
Agricultural Economics
January 2006 - 2010
92.0094.0096.0098.00
100.00102.00104.00106.00108.00110.00112.00
03/04
/05
04/01
/05
04/29
/05
05/27
/05
06/24
/05
07/22
/05
08/19
/05
09/16
/05
10/14
/05
11/11
/05
12/09
/05
01/06
/06
Agricultural Economics
Basic Backgrounding Budget(October to March)
550# steers @ $1.07 $588.50Hay (12 lbs @ $75 / ton) $67.50Hulls / Gluten (7 lbs @ $160) $84.00Mineral (.25 lbs at $20 / bag) $15.00Vet / Med $20.00Interest (6%) $19.11Death Loss (2%) $17.00
$811.11
BE Price = $95 on 850 steersMarch / April Futures at $110-112